Client economics in West Africa

Client economics in West Africa

By Simon Barrow

January 8, 2011

As I have observed in previous articles arising from my 2011 Ghana trip, economic and political life here is comparatively stable and prosperous, and there has been substantial growth over the past decade - but how benefits are assessed very much depends on perspective. Structurally, and in terms of levelling income and power distribution, things look much less rosy, for sure.

For a start, a huge proportion of the country's assets are foreign-owned, which means that both the financial and political systems are operated on what many would call a 'client' basis, with a shifting but essentially common agenda determined by the collaboration of local and global elites. The middle class is still very small.

Overdependence on oil and gold, the instability of agricultural commodity prices (50 per cent of GDP), the growth of urban poverty alongside wealth, and the lack of development in other productive sectors, are all endemic weaknesses.

For the visitor, the most visible sign of 'clientism' is in telecommunications. The privatisation of Ghana's state phone company has opened up a war between several companies, the largest of which are Vodaphone and MTN. Outside the big cities they advertise their wares (cell phones have become the major tool of distance communication for most Ghanaians) by offering to redecorate domestic and commercial buildings in the company colours and logo.

Everywhere you go, therefore, red vies with yellow. In some cases there may be other financial inducements involved, but in many instances people are poor enough simply to value the provision of paint. At present there is huge growth in the sector and glowingly advertised benefits to the consumer, but the emergence of a monopoly or managed duopoly soon claws back on loss leaders and focuses on profit extraction.

More broadly, around 80 per cent or more of Ghana's economy is located in the 'informal' sector, where reselling and bartering is king. Imports (many of them poor quality) from Abu Dhabi, India, China, South Africa, Brazil and elsewhere are substantial. Local produce is not as valued, it seems, as global products and brands. The wealth being created is very much concentrated in the hands of the few. Inflation is high and debilitating - much higher on the streets than is reflected in official statistics. Average income is around $900 annually, and this masks a welter of unevenesses. The IMF and World Bank call the shots behind (and sometimes not so behind) the scenes.

As in many developing countries, there is some 'trickle down' and much trickle around, but even more trickle up. This is where much of the new oil money is likely to go. Prestige developments can also bypass actual economic needs and capacities. In Kumasi we went past a huge modern glass-fronted commercial building with extensive lawns and gardens (themselves expensive to manicure and maintain in non-temperate climatic conditions). Tellingly, there was a huge 'To Rent' sign outside.

Most worryingly, Ghana is still a net importer of food. This factor combines with the even more fundamental impact of global commodity prices for agricultural produce and basic goods. Markets shaped by the rich can devalue and distort local and national effort at the low- and middle-income level, as the speculation-based money economy determines the actual one.

Politics is also profoundly effected by these economic realities. There have been municipal elections over the Christmas and New Year period in Ghana, after delays in some areas due to logistical difficulies. Local personalities, including business people and lawyers, have a prominent place in the system. As with the the last national elections, people are pragmatic - recognising that their own interests are tied in to what the elites are up to. This is a multi-party democracy, but there is a shadow side to that, rooted in economic and social dependencies.

The opportunities (and even more the challenges and iniquities) of a certain kind of globalisation are therefore all too evident in West Africa. There is a long struggle for justice ahead.

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(Ekklesia co-director Simon Barrow is travelling in Ghana over the new year. This is the seventh in a series of reflective blogs on religion, the legacy of slavery, economy and politics)

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